What Is Bitcoin Cash?
Bitcoin Cash: The Cryptocurrency Aiming for Everyday Usability
When the mysterious Satoshi Nakamoto first unveiled Bitcoin to the world in 2009, the goal was to create “a peer-to-peer electronic cash system.”
Over a decade later, Bitcoin has undoubtedly revolutionized finance and investing, but some argue it has fallen short of Satoshi’s original vision of providing a convenient digital currency for daily transactions.
Enter Bitcoin Cash – a cryptocurrency that emerged in 2017 with the explicit aim of facilitating faster, more affordable payments and micropayments.
In this comprehensive guide, we’ll explore the origins, technological innovations, community dynamics, and real-world use cases surrounding Bitcoin Cash.
Whether you’re a seasoned crypto enthusiast or a newcomer to the space, this article will equip you with a deep understanding of this fascinating offshoot of Bitcoin.
The Birth of Bitcoin Cash: A Contentious Hard Fork
The story of Bitcoin Cash began amid heated debates within the Bitcoin community over how to scale the pioneering cryptocurrency to handle increasing transaction volumes. As Bitcoin’s popularity soared, the limited block size of 1 megabyte led to longer confirmation times and rising fees, undermining its usability for smaller payments.
Some developers proposed increasing the block size limit, allowing more transactions to be processed in each block and alleviating network congestion.
However, this idea was met with fierce opposition from other factions within the community who feared that larger blocks would lead to greater centralization and compromise key principles of Bitcoin’s original design.
In August 2017, after years of intense disagreements known as the “Bitcoin Scaling War,” a group of miners, developers, investors and users decided to forge ahead with a hard fork from the original Bitcoin blockchain.
This pivotal event gave birth to Bitcoin Cash (BCH) – a new cryptocurrency with an initial block size of 8 megabytes, designed to provide better scalability and faster transactions at lower fees.
The hard fork created a permanent divergence from the original Bitcoin blockchain, with Bitcoin Cash effectively becoming an entirely new cryptocurrency. All holders of Bitcoin at the time of the fork automatically received an equal amount of the new Bitcoin Cash tokens on the new blockchain.
Key Innovations and Technological Advantages
While Bitcoin Cash shares its core ancestry with Bitcoin, it introduced several key innovations aimed at tackling the scalability challenges faced by the original cryptocurrency:
Larger Block Size: The most notable difference lies in Bitcoin Cash’s larger block size. It launched with an 8MB block size (later increased to 32MB) compared to Bitcoin’s modest 1MB. Bigger blocks can accommodate more transactions, enhancing the throughput capacity of the network and enabling faster confirmations.
New Addressing Format: To prevent transactions from being replayed across both blockchains, BCH implemented a new address format beginning with “bitcoincash:”
This ensured transactional isolation and prevented any unintended movements of funds between the two chains.
Transaction Malleability Fix: Bitcoin Cash incorporated a malleability fix that removes a major source of transaction malleability, reducing cases of parallel chain splits and improving overall network resilience.
Adjustable Difficulty: The Bitcoin Cash protocol features an adjustable difficulty algorithm that allows the mining difficulty to be recalculated at each block.
This dynamic mechanism prevents wild fluctuations in hashrate between the Bitcoin and Bitcoin Cash networks.
While supporters hailed these changes as vital improvements, critics argued that increasing the block size compromised key principles like decentralization, by favoring larger mining operations with more resources.
The Bitcoin Cash Community and Use Cases
Since launching in August 2017, Bitcoin Cash has developed a passionate community of miners, merchants, investors, developers and enthusiasts attracted to its vision of reviving Bitcoin’s original use case as electronic cash.
This community has driven the adoption.